The question of whether packing materials are the subject-matter of agreements to sell is a pure question of fact and must be decided on the basis of the relevant material.

Judgment

SUBBA RAO,

( 1 ) THIS appeal by certificate granted by the High court of Andhra Pradesh is preferred against the judgment dated 8/04/1964, of the said court in Tax Revision Case No. 48 of 1963.

( 2 ) THE appellant, Messrs Hyderabad Deccan Cigarette Factory, hereinafter called the assessee, is a manufacturer of and dealer in cigarettes. The cigarettes are sold both within and outside the State of Andhra Pradesh. The appellant was assessed under the Andhra Pradesh General Sales Tax Act, 1957, hereinafter called the Act, to sales tax on its turnover of Rs. 1,77,363. 01 for the period October I, 1957, to 13/12/1957. As by a notification dated 13/12/1957, issued by the State government, sales or purchases of tobacco and all its products were exempted from sales tax with effect from 14/12/1957, the turnover in respect of the sales of tobacco was excluded from the total turnover. But, on the ground that the exemption did not apply to containers and the packing materials, which consisted of cardboard and dealwood, the Commercial Tax Officer issued a notice to the appellant on 22/03/1962, proposing to assess the escaped turnover in respect of the said materials. The assessee, inter alia, contended that there was no sale of packing materials at all and that it sold only cigarettes at Rs. 8. 75 per thousand without charging anything extra for the packing materials and that the price was the same to whatever place they were sent. In other words, the contention of the appellant was that the packing materials were not part of the agreements of sale between itself and its customers. The Commercial Tax Officer, by his order dated 29/03/1962, held that in the circumstances of the case the assessee must be deemed to have sold the packing materials with the cigarettes and charged a consolidated price for the same. The appeal filed against that order to the Assistant Commissioner of Commercial Taxes, Hyderabad, was dismissed. The further appeal to the Sales Tax Appellate tribunal was also dismissed. The assessee preferred a revision against the order of the Sales Tax Appellate tribunal to the High court of Andhra Pradesh. A division bench of the said High court held, agreeing with the Sales Tax Appellate tribunal, that a contract to sell the packing materials and the packets was implicit in the contracts of sale of the goods and that, therefore, sales tax was exigible in respect of the price of the said packing materials. Hence the appeal.

( 3 ) MR. Palkhivala, learned counsel for the assessee-appellant, raised before us the following points : (1) Neither the Sales Tax Authoritiesnor the High court had given a definite finding on the crucial and important question, namely, whether in fact the assessee, as it had contended all through, sold the cigarettes at the same rate, whether it sold them in cardboard or wooden cases and whether in or outside the State of Andhra Pradesh ; if that fact was held in favour of the assessee, the argument proceeded, it would be decisive of the question whether the packing materials were the subject-matter of the agreements of sale between the assessee and its customers. (2) The question whether the packing materials were the subject of the agreements of sale between the assessee and "its customers was a pure question of fact depending upon the nature of the goods sold and the nature of the packing materials and the purpose for which the said materials were used. In the present case, it was said, the packing materials, namely, cardboard and dealwood boxes, were the minimum materials necessary to give or send the cigarettes to the customers and that it could not have been possibly the intention of the seller to sell or the buyer to buy the said materials which had no intrinsic worth apart from the cigarettes they contained. And (3) under the Act, the turnover of the sale transactions was exigible to sales tax ; and the definition of "turnover" included the packing materials: that is to say, sales tax was payab